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Ministerial Diaries - now proactively disclosed

I am amazed that this has not been picked up by mainstream media. There have been so many advocates for greater transparency in government (like Holly Walker, a Green MP) and New Zealand's government has both been a good proponent of open government, and has seen controversy when it fails to be sufficiently open and transparent.

My compliance consultant, Rob Dowler, has been a very vocal advocate of MPs disclosing their meetings - which is a robust, clear, and easily actionable step in getting greater transparency. His advocacy has directly contributed to a change announced by the government to 'proactively disclose' their diaries. This has now started, and you can see, for example, the disclosure made by the Hon. Kris Faafoi at this link. This is a good change, and I am delighted it has been adopted and particularly glad to celebrate with advocates for it - especially Rob.

Now, like most freedoms, we have to ensure we make use of it and defend it if someone comes up with the idea that they would like to stop doing it...

Legacy customers should not be given less attention than newer customers... but there is more than one way to do that

The Financial Markets Authority and Reserve Bank concluded that those considered to be legacy customers, clients who currently are operating on policies that are no longer on offer to new clients, should not be disadvantaged as a direct result of current employees lacking relevant knowledge on retired policies. Current operations in place to service clients who wish to remain on legacy policies, include placing the workload on a number of experienced employees who have knowledge on the various retired policies.

Our regulators suggested in the conduct and culture report suggest that insurance companies invest in employee training on legacy products, and through this, insurance companies are able to ensure that all customers are able to experience optimal customer service. (Click here to read more).

But there are other approaches, and there really have to be. As most insurers will know, training staff on what could be an ever-growing range of products must have a limit in terms of effectiveness. Sooner or later you need to shift people from legacy products, and build new products with terms that allow you bring them with you - rather than isolate them on 'legacy island'.

"We are not advocating to ban commissions altogether": Everett, FMA

Financial Advice New Zealand included this transcript from the recent select committee interview in their newsletter, and it is worth repeating here:


"We are not advocating to ban commissions altogether": Everett, FMA

See below Rob Everett's response to Paul Goldsmith's question at the recent select committee: “Are you of a mind—a number of suggestions out there that all conflicted advice should be banned full stop, you wouldn’t be advocating for that or would you?”

Rob Everett"So our recommendation in the report made a distinction between sales incentives that are offered by employees of whoever provides the products, where we were pretty tough I think on saying that we thought volume-based sales incentives should be removed.

As you know, advice is more complex, because people, where people are buying products through an advice channel as opposed to directly from the provider, which generally speaking should be a good thing, people don’t like to pay upfront for advice.

So it puts you in a position of having to look at the structure of remuneration for the advisers that would be different than in an employed environment.

And that is complex, it was a big part of the debate on the financial advice bill, and our view as stated in the report is that, we want product providers to work very hard at structuring commissions and other incentives for advisers so that they respond to the needs of the customer - we’re not advocating they be banned altogether.”

HFANZ: Insurers funding record healthcare as access to public system worsens

February 25, 2019


Insurers funding record healthcare as access to public system worsens

Health insurers have been funding record levels of healthcare and covering more surgery as DHBs struggle to meet people’s needs in a reasonable timeframe, the Health Funds Association (HFANZ) said today.

Commenting on the release of health insurance statistics for the 2018 year, HFANZ chief executive Roger Styles said health insurance was actually providing a safety net to the public system for those who have it.

“It’s clear we have not seen any improvement in access to public surgery in the past year. If anything it seems to have got worse,” Mr Styles said. He said there had been huge disruption in the public hospital sector, with waves of industrial action having an adverse impact on DHBs meeting people’s surgery needs, and DHBs set to cut spending further to avoid massive debt blowouts.
“Health insurance has provided timely access to surgery for the nearly 30 percent of New Zealanders who have it – with funded healthcare claims up nearly 10 percent in the past year,” Mr Styles said.

“Of course, with more claims funded, premiums are also up over the past year by around 8 percent, although there has been an increase in total lives covered – up by 20,000 over the 2018 year, or around one and a half percent.”

Despite concern over recent years around the affordability of sustained premium increases, particularly for older New Zealanders, health insurance coverage for those aged 65 and over remained at around 22 percent of the population.

Mr Styles said HFANZ had some tips for those looking to mitigate the impact of rising premiums. “Opting for a higher excess is the most common. This effectively means self-insuring a portion of potential treatment costs and covering smaller medical bills out of pocket, but having health insurance for the big things if needed. Most insurers offer excesses of $2000– $4000 in return for a lower monthly premium.”

Choosing major medical rather than comprehensive insurance would also reduce annual premiums, he said. This was now the most common policy with around two-thirds of those insured.
Mr Styles said it made sense for people to simply talk with their insurer about what options might be available to limit or even reduce premium increases. The latest HFANZ statistics showed the number of lives covered was up by 2100 for the December 2018 quarter, bringing the total number of New Zealanders with health insurance to 1.403 million.

Claims paid in the December quarter was up 11.9 percent to $346 million on the same period in 2017, while annual claims paid for calendar 2018 totalled $1.3 billion, up $115 million or 9.7 percent.
Premium income for the quarter was up $12 million or 3.2 percent on the September 2018 quarter to $403 million. Annually, premium income rose $119 million or 8.3 percent to $1.550 billion.


Click here to download the statistical summary.

The difference between an investment customer attitude to fees and an insurance customer

Recent research from Cerulli Associates has found that after surveying over 8,000 investors clients prefer fee-based advice as opposed to the commission-based option. Click here to read more.But these people are demographically different to insurance clients. Being older, and having capital, they can usually afford a large fee. They can easily rationalise self-financing: the expected return in an average year should well exceed the expected fee. The challenge will be how we get typical insurance clients to get to the same place - and all the while recognising that most of them do not have the money of lump sum investors. For those that offer fee-based research, and they are few, even fewer are tackling the financing of advice. This can be done, but takes effort.

Suncorp looking to work with regulators amid revenue downturn

Suncorp “working closely with the New Zealand Government and regulators on the Conduct and Culture review of the life insurance industry.”

Suncorp, the parent company of Asteron Life and AA Life, has made a pledge to work alongside the government and regulatory bodies to ensure a fairer outcome for customers. Reprioritisation arises while the life insurance sector of the company has experienced a nearly 24% decline in net profits; although overall Suncorp operations experience an increase of 79.1% when compared to the prior corresponding period.

Click here to read more.